Employee Fraud: 4 Types of Employee Fraud and How to Detect Them

Published
Oct 25, 2018

Oct 25, 2018

As thinkpieces are popping up all around telling us when it's okay to steal from work, employers might disagree with this attitude. Employee fraud is real and it can dig into your bottom line in a way that can impact business. If you're worried about fraudulent behavior, you need to know how to categorize it.

Here are four types of fraud and what they look like.

1. Time Theft

No matter what the size of your business is, you could be dealing with fraudulent timesheets form your employees or time theft on the job. This can take a lot of different forms and might not even be intentionally malicious.

If your employees clock in earlier than they're scheduled and then go grab a coffee down the street, they might think they're just making themselves available. However, if they're not working the hours that they're clocked-in, that's time theft.

Salaried employees might take advantage of a loose work environment by doing personal work when you expect them to be working for you. This is another form of fraud to be wary of.

2. Theft of Services

Your employees don't need to walk out of your building with products to commit fraud or theft. If you offer services and they obtain them for free without your consent, that's a type of fraud.

They could use a parking pass for personal reasons and end up costing you money every time it gets used. If you have train passes on hand for company business and your employee leaves all weekend with it, they might be committing fraud.

This will really depend on the type of business you run. You might not even have the same tangible services to keep track of as most companies. For example, if you have an e-commerce site, read more about what e-commerce fraud can look like.

3. Assisting Fraud

Fraud doesn't have to directly benefit your employees for them to commit it. If you work in insurance and your employee takes a liking to one of your clients, they might brush problems under the rug. If your client makes a claim that seems spurious but is well liked by an agent, they might not uncover obvious fraud.

In the financial industry, this can be termed as insider trading. If someone has information about a stock about to jump up or tumble down and they let someone know that information, they've assisted fraud.

4. Lying About Background

Some employees have backgrounds that they're not proud of. Others will claim to have a background they don't have in order to gain your favor. We get tested every day in learning who to trust in our professional lives.

Failing to disclose information about a theft they committed as a teenager is much different than lying about a degree or certification required by their employment. If they claim that they have a legal certification that they're missing, you should have a serious conversation with them about this type of fraud.

Employee Fraud Can Sink a Company

When employee fraud gets out of hand, it can do serious damage to a company. When customers find out that people are stealing from an employer, they lose respect for a company and that can have a domino effect.

If you want to see how nefarious fraud can be, check out our latest guide.